Government signs mammoth five-year IT deal with IBM

Highest value contract ever signed by the government

The federal government has signed a whole-of-government purchasing agreement with IBM worth an estimated $1 billion over its five-year lifespan.

The government expects the mammoth deal will deliver more than $100 million in savings.

All government agencies will be able to take advantage of the agreement, IBM said. The scope includes hardware, software, support and cloud-based services. IBM said it also covered “joint innovation programs” in quantum computing, information security, and research.

“The whole-of-government agreement reflects the growing importance of technology to the government’s transformation agenda,” said IBM Australia and New Zealand managing director David La Rose,

“For agencies it will be more simple and cost efficient to engage with IBM. While our technologies make it possible for government to delivery smarter, integrated, always-on digital services for citizens.”

“As a major buyer of IBM’s products and services, the deal enables us to maximise the return on our ICT investments and ensures that taxpayers are always getting the best possible value for money,” said a statement issued by Michael Keenan, the human services minister and minister assisting the prime minister for digital transformation.

“The deal has also been structured to enable small and medium-sized firms to engage with IBM through ‘channel partner’ arrangements to ensure they also benefit.”

IBM said that the Department of Human Services (DHS), the Australian Taxation Office (ATO), the Department of Home Affairs (DHA), and the Department of Defence (DOD) — all of which have existing partnerships with the company — would benefit from the agreement, which “gives them the autonomy and flexibility to change the profile of their technology over the next five years”.

Keenan said that the agreement was in line with the findings of the 2017 ICT Procurement Taskforce report.

In its response to the report, the government said that it would impose a cap of $100 million and a duration of three years on ICT contracts — however, it said exceptions would be possible if endorsed by the assistant minister for digital transformation and the finance minister.

The procurement report found that there had been “only a very limited amount of coordinated, whole-of-government engagement with industry with regards to ICT procurement”.

“There is currently only a single whole-of-government agreement between the government and an industry vendor, and although more are currently under negotiation, there is no framework or process through which either the government or agencies strategically identify those industry vendors they should be reaching partnerships and agreements with,” the report said.

“More generally, the taskforce observed that agencies have underdeveloped partnership and relationship management with their vendors.”

The new deal is effective immediately and will last until June 2023.

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